As New Rules for Budget Take Effect, Educators Unable To Predict

Washington--This year's wrangle over the federal budget will be like
no other in recent memory, and education advocates say they are unable
to predict the outcome.

While reining in the federal deficit was previously the task faced
by the Congress and the White House, their 1990 budget agreement
changed the ground rules. What matters this year is how much they
spend.

Exceeding the agreed-upon spending guidelines would lead to a
funding cut, known as a "mini-sequester," in the offending budget area
instead of across all categories as was standard practice in the
past.

Federal receipts will continue to exceed spending through the life
of the five-year agreement, but by limited amounts, if the Congress
abides by the rules.

The idea is that temporary conditions causing the deficit to
balloon--the Persian Gulf war, the savings-and-loan bailout, and the
recession--will fade. The $327-billion deficit for the fiscal year that
began Oct. 1 will then become a surplus of $19.9 billion in fiscal year
1996, according to the budget plan, which was approved along with the
1991 budget.

"This is not merely changing the chairs on the Titanic," Stanley E.
Collender, a budget analyst with the accounting firm Price Waterhouse,
told a group of education lobbyists recently. "This is a whole new
ship."

"The deficit can go through the roof and the process doesn't give a
damn," Mr. Collender said.

Three Budget Categories

The Budget Enforcement Act of 1990 has divided the budget into three
categories--defense, international, and domestic--and capped them at
various funding levels. For the first three years of the budget deal,
or through fiscal 1993, the Congress will be unable to transfer money
from one category to another.

For example, if the Congressional budget comes in below the $291.4
billion allotted for defense spending for fiscal 1992, the Congress
cannot use the amount saved for education.

The non-transfer provision "means we won't get a 'peace dividend,"'
said Susan Frost, executive director of the Committee for Education
Funding, an umbrella group that lobbies on behalf of education
organizations.

Until the onset of the military buildup in the Middle East, some
budget analysts had hoped the thawing of the Cold War would result in
more money for domestic programs.

But now any boost in spending for a domestic program must correspond
with the elimination or reduction of other domestic programs. Such
reductions would likely come from programs funded under the same bill
as the program getting a boost.

As Mr. Collender put it: "It's not just what you want and how much.
It's who else is trying to get what and how it's going to be paid
for."

Although education lobbyists here have looked disparagingly at the
rules governing the spending caps, Ms. Frost noted that the cap for
domestic spending has increased by $17.2 billion, from $182.9 billion
in the current fiscal year to $200.1 billion for fiscal 1992.

It is unclear how much of that money will be available for the
Labor, Health and Human Services, and Education appropriations
subcommittees in fiscal 1992, Ms. Frost said. That, she said, probably
will not be known until the House and the Senate pass budget
resolutions. The resolutions will provide a blueprint for next year's
spending.

"We are assuming, until we are told differently, that there is room
for the commitment to education that we saw last year," Ms. Frost
said.

"It makes no sense to fight [against] health research or infant
mortality or the [Women, Infants, and Children] program," she added.
"The idea is to make Labor-hhs more of a priority."

'Mini-Sequester' Provision

The new rules also aim to cut off an escape route that had been
popular in the past. If supplemental appropriations enacted outside the
regular budget process cause a category to surpass its cap, a
"mini-sequester" takes effect in that category.

If supplemental appropriations are enacted after June 30 of the
fiscal year, those amounts are sliced from the following year's
spending cap.

Last fall's budget agreement also calls for restrictions on spending
for mandatory programs. Creation of a new entitlement or the expansion
of an existing one must be offset by a tax increase or reductions in
entitlement spending elsewhere.

This is known as pay-as-you-go spending, and it holds true for tax
cuts as well. Violations of this rule prompt a mini-sequester among
non-exempt entitlements.

The guaranteed-student-loan programs are the only educational
entitlements, and are not exempt.

In fiscal 1994, the President can initiate a move back to the
Gramm-Rudman-Hollings rule, which mandated across-the-board cuts if
deficit targets were not reached.

If the process adopted in the Budget Enforcement Act holds, however,
federal spending in all three broad categories will be lumped together
for 1994, and the Congress will not be barred then from reducing
funding in one category to increase it in another.

The act, which has survived one repeal opportunity, is subject to
suspension in the event of a declaration of war or if the economy has
two consecutive quarters of negative growth. Such suspensions are not
automatic.

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